BISMARCK, N.D. -- A little known North Dakota law adopted in March and enabling credit union-to-mutual bank conversions in two years has been added to the national conversion dialogue and lexicon.
The quirky measure, which takes effect Aug. 1 and which drew the support of the North Dakota Bankers Association and the reported backing of one Bismarck credit union, would permit state-chartered CUs to convert to a "savings & loan" by 2009.
One huge caveat, however, is that savings & loans are no longer authorized to operate since their existence was repealed in a separate law passed this session aimed at cleaning up outdated language.
There haven't been state-chartered S&Ls in North Dakota for nearly 25 years with all converting to federal charter prompting the need for the Department of Financial Institutions to junk the S&L language.
Any move to restore S&Ls and enable a conversion would have to come in 2009 since North Dakota lawmakers convene every other year.
Tim Karsky, commissioner of financial institutions, said his office would begin working on a new S&L law in 2008, but sources said there was no certainty such a law would pass making any conversion moot.
Backing for the 2009 enabling statute, said officials, came from Ervin Mund, president/CEO of the $23 million St. Alexis Community Credit Union of Bismarck seeking an MSB as an "option." Mund said he would have "no comment" on the measure or on whether his CU would indeed seek a mutual bank charter.
Three years ago Mund was among a group of renegade CU executives who complained bitterly to the North Dakota Credit Union League over a restrictive branching law pushed through the legislature by the banking lobby. A number of CUs resigned the league with hints by at least one CEO that he might consider an MSB charter.
St. Alexis was not the CU and it is not a member of the new Mid-America Credit Union Association.
Sources said interest in the new law by the North Dakota Bankers Association suggests a means of gaining new members as well as taxing former CUs.